Correlation Between Keurig Dr and Nextracker

Can any of the company-specific risk be diversified away by investing in both Keurig Dr and Nextracker at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Keurig Dr and Nextracker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keurig Dr Pepper and Nextracker Class A, you can compare the effects of market volatilities on Keurig Dr and Nextracker and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Keurig Dr with a short position of Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Nextracker.

Diversification Opportunities for Keurig Dr and Nextracker

-0.47

Correlation Coefficient

Keurig Dr  Nextracker

Very good diversification

The 3 months correlation between Keurig and Nextracker is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A and Keurig Dr is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Keurig Dr Pepper are associated (or correlated) with Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Keurig Dr i.e., Keurig Dr and Nextracker go up and down completely randomly.

Pair Corralation between Keurig Dr and Nextracker

Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Nextracker. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 3.48 times less risky than Nextracker. The stock trades about -0.13 of its potential returns per unit of risk. The Nextracker Class A is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,734  in Nextracker Class A on September 17, 2024 and sell it today you would lose (204.00) from holding Nextracker Class A or give up 5.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Keurig Dr Pepper  vs.  Nextracker Class A

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Nextracker Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextracker Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nextracker is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Keurig Dr and Nextracker

The main advantage of trading using opposite Keurig Dr and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr position performs unexpectedly, Nextracker can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nextracker will offset losses from the drop in Nextracker's long position.

The idea behind Keurig Dr Pepper and Nextracker Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.